PVS Semi-Annual Report, 2015

Partners Value Split Corp. has released its Semi-Annual Report to June 30, 2015.

The company has the following issues outstanding: PVS.PR.A, PVS.PR.B, PVS.PR.C and PVS.PR.D.

Figures of interest are:

MER: I suggest it is best to include the amortization of share issue costs in MER – after all, this is a charge against the stated value of the company. Therefore, expenses were $215,000 (regular expenses) + $739,000 (amortization) = $954,000 for six months on assets of $3.301-billion (see below) or 4bp p.a..

Average Net Assets: We need this to calculate portfolio yield and MER. There were negligible capital transactions, so we’ll just take the average of the beginning and end of period assets (including preferred shares) so: [(2.733-billion + 0.761-billion) + (2.348-billion + 0.760-billon)]/2 = $3.301-billion

Underlying Portfolio Yield: Total Income of $23.3-million semi-annually divided by average net assets of $3,301-million is 1.41% p.a..

Income Coverage: Net income of $23.068-million less amortization of $0.739-million is $22.329-million to cover senior preferred dividends and debenture interest of $12.964-million is 172%. However, I consider it prudent to include the $10-million p.a. stated entitlement of the Junior preferreds, even though none of this was actually paid in 2015 to date because the Juniors can be retracted at any time, which could prove embarrassing in times of extreme stress. So I’d say income coverage is 124%.

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